State Operating Support and Use of Federal “Maintenance of Effort” Provisions

Federal Policy Priorities

State Policy Priorities

Encourage state lawmakers to view their public colleges and universities as economic assets that provide critical competitive leverage; thus, operating support for public postsecondary institutions and per-student appropriations should be elevated as a state policy priority.

Support states’ utilization of equitable performance funding incentives that promote institutional efforts to boost degree completion and account for the diverse missions within the public higher education sector.

Summary

A confluence of demands on state revenue has led state lawmakers to disinvest in public higher education, leaving students and families to carry an ever-increasing share of the cost of a college education. The increasing financial burden and mounting student debt levels may discourage students’ entry and completion of a postsecondary degree or credential at a time when the nation’s economy needs broad-based increases in human capital.

To counter these trends, the federal government can leverage its spending power to encourage states to maintain their financial commitment to public higher education. Federal maintenance of effort (MOE) provisions require states to maintain spending above a certain threshold in order to receive federal funding tied to specific programs. These MOE provisions aim to ensure that federal funds are used to supplement state funding for a specific purpose, rather than supplant existing state monies. The inclusion of MOE provisions are one way to encourage states to re-invest in higher education; such investment can in turn mitigate rising college tuition prices and better ensure college affordability.

An analyses conducted by AASCU involving MOE provisions included in three separate pieces of federal legislation suggests that states likely calibrated their public higher education spending in order to meet thresholds defined by the federal laws. Without these provisions, states likely would have made deeper funding cuts to higher education and supplanted state funds with federal monies, leading to higher tuition rates for students and families. State spending data related to MOE provisions suggests that this can be an effective strategy in prompting states to uphold their financial commitment to higher education.